How 1099 self-employment taxes work
When you work as an employee, your employer pays half of your Social Security and Medicare tax and withholds the rest from each paycheck. As a 1099 contractor you are both employer and employee, so you pay the full15.3% yourself and nobody withholds anything. That is why freelancers need to budget for tax on every invoice and send quarterly estimated payments.
The three layers of tax on freelance income
- Self-employment tax: 12.4% Social Security (on net earnings up to $184,500) plus 2.9% Medicare on 92.35% of net profit. High earners add a 0.9% Additional Medicare Tax.
- Federal income tax: progressive brackets from 10% to 37%, applied after the $16,100 standard deduction (single), half of your SE tax and the 20% QBI deduction.
- State income tax: anywhere from zero in Texas, Florida and Washington to a top rate of 13.3% in California.
2026 take-home pay on $100,000 of 1099 income, by state
Single filer, $100,000 net profit, no other income. Ranked from highest to lowest take-home pay.
| State | Income tax structure | State tax | Take-home |
|---|---|---|---|
| Florida | no state income tax | $0 | $77,635 |
| Texas | no state income tax | $0 | $77,635 |
| Washington | no state income tax | $0 | $77,635 |
| Ohio | a progressive income tax from 2.75% to 2.75% | $1,839 | $75,796 |
| Arizona | a flat 2.5% income tax | $1,921 | $75,715 |
| Pennsylvania | a flat 3.07% income tax | $2,853 | $74,782 |
| North Carolina | a flat 3.99% income tax | $3,199 | $74,436 |
| Colorado | a flat 4.4% income tax | $3,381 | $74,255 |
| New Jersey | a progressive income tax from 1.4% to 10.75% | $3,730 | $73,905 |
| Georgia | a flat 5.19% income tax | $4,201 | $73,435 |
| Massachusetts | a progressive income tax from 5% to 9% | $4,427 | $73,209 |
| Illinois | a flat 4.95% income tax | $4,459 | $73,176 |
| New York | a progressive income tax from 4% to 10.9% | $4,528 | $73,108 |
| California | a progressive income tax from 1% to 13.3% | $4,551 | $73,084 |
| Virginia | a progressive income tax from 2% to 5.75% | $4,598 | $73,038 |
2026 federal income tax brackets (single)
| Rate | Taxable income (single) | Taxable income (married filing jointly) |
|---|---|---|
| 10% | $0 – $12,400 | $0 – $24,800 |
| 12% | $12,400 – $50,400 | $24,800 – $100,800 |
| 22% | $50,400 – $105,700 | $100,800 – $211,400 |
| 24% | $105,700 – $201,775 | $211,400 – $403,550 |
| 32% | $201,775 – $256,225 | $403,550 – $512,450 |
| 35% | $256,225 – $640,600 | $512,450 – $768,700 |
| 37% | Over $640,600 | Over $768,700 |
Ways to lower your self-employment tax bill
- Track every deductible business expense; each dollar of expense saves self-employment tax as well as income tax.
- Contribute to a SEP-IRA or Solo 401(k) to reduce income tax (SE tax is not reduced).
- Deduct self-employed health insurance premiums if you are not eligible for an employer plan.
- Once profit is consistently high, ask a CPA whether an S corporation election would cut payroll taxes.